The CSS file did not download correctly, the screen reader does not support CSS, or your version of Internet Explorer is too
old for this website.

To get the best possible experience using our website, you should upgrade to a newer version of Internet Explorer, or use
other browser alternatives. If you are using a computer at work, contact your IT administrator.

Discussion Papers no. 825

Life time pension benefits relative to life time contributions

Share object

Content

Over the life course members of an insurance system normally will contribute by payments when in working age, and later receive
pension benefits as e.g. disabled or old-age pensioners.

Over the life course members of an insurance system normally will contribute by payments when in working age, and later receive
pension benefits as e.g. disabled or old-age pensioners. Total expected discounted contributions from labour market earnings
may be compared to the expected discounted sum of benefits from pensions received. The first cohorts covered with benefits
from a pay-as-you go pension system will normally receive higher benefits than what follows from their contributions. Reforms
of the pension system may also affect the ratio between discounted life time pension benefits and discounted life time contributions.

In Norway the former National Insurance Scheme was introduced in 1967, and a reform of this system has been implemented from
2011. Budgetary and distributional effects are analysed by the dynamic micro simulation model MOSART. The aim of this paper
is to analyse the distributional consequences between generations from implementation of the system in 1967 and the reform
from 2011. Problems arising in this kind of analyses are discussed, and effects are presented for different groups of the
population by birth cohort, gender, education and for natives versus immigrants.

As expected the results show that the cohorts who established the pay-as-you-go system experienced a substantial gain by letting
future generations pay. For later cohorts discounted value of benefits received is lower than the discounted value of contributions.
With a positive net rate of interest the value of contributions as young is more worth than the corresponding value of benefits
received as old. Over the life course the pension system distributes incomes from men to women, but women are more affected
by the pension reform in 2011 than men.